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The Impact of Financial Innovation on Enhancing Banking Efficiency: An Analytical Study of Iraqi Commercial Banks (2017-2024)

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  • Ahmed Risian

  • Afnan Fattah Imran Ali

Abstract

This study aims to analyze the impact of financial innovation on improving banking efficiency through an analytical examination of a sample of Iraqi commercial banks during the period 2017-2024. The study employed a set of financial innovation indicators, namely the ratio of expenditure on financial innovations, the number of innovative products, and the number of digital transactions. Banking efficiency was measured using profitability indicators represented by Return on Assets (ROA), Return on Equity (ROE), and Return on Deposits (ROD). The study incorporated a mediating variable represented by the liquidity ratio to explain the nature of the relationship between financial innovation and banking efficiency. An advanced econometric approach was utilized, including Autoregressive Distributed Lag (ARDL) models using EViews 9, to measure the relationship between study variables in both the short and long term. The results demonstrated a statistically significant positive impact of financial innovation indicators on banking efficiency, in addition to a partial and significant mediating role of the liquidity ratio. This confirms the importance of adopting financial innovation as a strategic tool for enhancing banking performance and strengthening operational efficiency in Iraqi commercial banks.

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Handle: RePEc:eon:eonabj:v:1:y:2026:i:2:p:149-180:id:23
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File URL: https://aradojournal.org/index.php/abj/article/view/23/58
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